Karachi: FrieslandCampina Engro Pakistan Limited (FCEPL) announced a notable increase in its third-quarter profits for 2024, achieving growth despite new fiscal challenges and a changing consumer landscape. The company reported a 28% increase in year-to-date profit after tax compared to last year, underpinned by improved gross margins and lower tax expenses.
According to FrieslandCampina Engro Pakistan Limited, the imposition of an 18% sales tax on UHT milk starting July 1, 2024, previously exempt from such taxation, has significantly impacted the processed milk category. This shift has promoted the consumption of untaxed, unsafe loose milk amid declining disposable incomes. Despite these challenges, FCEPL’s agile business model and cost efficiency initiatives across its value chain have allowed it to mitigate the inflationary pressures effectively, resulting in a 60 basis point improvement in gross margins.
The dairy-based products segment, led by the flagship brand Olper’s, reported a revenue of Rs. 73.5 billion, marking a 12% increase over the same period last year. The growth was fueled by the “Happy Mornings” campaign and a strong focus on value proposition and distribution. The frozen desserts segment also showed robust performance, with an 11% growth, driven by the “Wow Bharay Deserts” campaign aimed at de-seasonalizing the category.
FCEPL’s financial performance for the nine months ending September 30, 2024, showed an 11.8% increase in net sales and operating profit, maintaining a stable profit margin of 2.4% of sales. Despite the new sales tax, the company demonstrated resilience, adapting to market changes with relevant consumer offerings and strict cost control measures.
Moving forward, FCEPL will continue to engage with stakeholders to seek a level playing field in the milk category and enhance its contribution to better nutrition in Pakistan. Leveraging its global expertise and a 150-year heritage, the company remains committed to upholding the highest standards of food safety, hygiene, and sustainability.